Correlation Between Tencent Music and Marfrig Global
Can any of the company-specific risk be diversified away by investing in both Tencent Music and Marfrig Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tencent Music and Marfrig Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tencent Music Entertainment and Marfrig Global Foods, you can compare the effects of market volatilities on Tencent Music and Marfrig Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tencent Music with a short position of Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tencent Music and Marfrig Global.
Diversification Opportunities for Tencent Music and Marfrig Global
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tencent and Marfrig is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Tencent Music Entertainment and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods and Tencent Music is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tencent Music Entertainment are associated (or correlated) with Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Tencent Music i.e., Tencent Music and Marfrig Global go up and down completely randomly.
Pair Corralation between Tencent Music and Marfrig Global
Considering the 90-day investment horizon Tencent Music is expected to generate 1.05 times less return on investment than Marfrig Global. But when comparing it to its historical volatility, Tencent Music Entertainment is 1.04 times less risky than Marfrig Global. It trades about 0.06 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 203.00 in Marfrig Global Foods on August 24, 2024 and sell it today you would earn a total of 82.00 from holding Marfrig Global Foods or generate 40.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Tencent Music Entertainment vs. Marfrig Global Foods
Performance |
| Timeline |
| Tencent Music Entert |
| Marfrig Global Foods |
Tencent Music and Marfrig Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tencent Music and Marfrig Global
The main advantage of trading using opposite Tencent Music and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tencent Music position performs unexpectedly, Marfrig Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Marfrig Global will offset losses from the drop in Marfrig Global's long position.| Tencent Music vs. Baidu Inc | Tencent Music vs. Twilio Inc | Tencent Music vs. Spotify Technology SA | Tencent Music vs. Weibo Corp |
| Marfrig Global vs. Artisan Consumer Goods | Marfrig Global vs. Avi Ltd ADR | Marfrig Global vs. Aryzta AG PK | Marfrig Global vs. The A2 Milk |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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